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Priyanka LIC Project - IT IS A BANK REPORT OF LIC

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A PROJECT REPORT
ON
" A COMPARATIVE STUDY ON MANAGING THE FINANCES
BY LIFE INSURANCE CORPORATION OF INDIA "

IN THE PARTIAL FULFILLMENT OF THE DEGREE

OF
MASTER OF BUSINESS ADMINISTRATION (MBA)

GURU GOBIND SINGH EDUCATIONAL SOCIETY’S TECHNICAL

CAMPUS KANDRA, CHAS, BOKARO(JHARKHAND)
(Affiliated to Jharkhand University of Technology, Ranchi)

PROJECT GUIDE (COLLEGE): SUBMITTED BY:

PROF. MAHAVIR PRASAD PRIYANKA KUMARI
ROLL NO.
21031710037
PROJECT GUIDE (LIC): MBA (FINANCE &
HR) ASHISH HANSDA (AO)

EXTERNAL EXAMINER SIGN: HOD SIGN:

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DECLARATION

I ,PRIYANKA KUMARI hereby declare that this project report entitled A

COMPARATIVE STUDY ON MANAGING THE FINANCES BY LIFE
INSURANCE
CORPORATION OF INDIA “PROJECT”, completed under the guidance of Mr.
ASHISH HANSDA (AO in LIC Branch III, Chas) & Prof. VIKASH KUMAR
JAIN
(HOD), MAHAVIR PRASAD (INSTITUTIOMNAL GUIDE) is the result of my efforts
during the training period which I have undergone as a part of the curriculum in MBA from
GURU GOBIND SINGH EDUCATIONAL SOCIETY’S TECHNICAL
CAMPUS,
BOKARO. I thereby declare that I would have fulfilled the provision of institutional
training in LIC and based on the training I had acquainted myself to the best in the
knowledge of project “A COMPARATIVE STUDY ON MANAGING THE
FINANCES BY LIFE
INSURANCE CORPORATION OF INDIA”. The work is done by me is original work
and authentic to best of my knowledge.

NAME OF STUDENT: REGISTRATION NO. :

PRIYANKA KUMARI 21031710037

ASSISTANT PROFESSOR: HOD:

Mr. MAHAVIR PRASAD Mr. VIKASH KUMAR JAIN

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SIGNATURE : SIGNATURE :

G. G. S. E. S. T. C , BOKARO, MBA DEPARTMENT

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CERTIFICATE

On the basis of the declaration submitted by “JYOTI KUMARI”, a student of MBA. I, Prof.
MAHAVIR PRASAD, of MBA Dept. , hereby certify that the project entitled “Mutual Fund
Comparison and Distribution Perception on Asset Management Company", submitted at
GURU GOBIND SINGH EDUCATIONAL SOCIETY’S TECHNICAL CAMPUS,
Jharkhand University of Technology, Ranchi , in the partial fulfillment for the award of the
degree of Master of Business Administration, is an original contribution with existing
knowledge and faithful record of research carried out under my guidance along with the
supervision of company HDFC Certified further, that to the best of my knowledge the work
reported here does not form part of any other report. I recommend submitting the project report. I
wish her all success in life.

DATED : ASSISTANT
PROFESSOR : 04/05/2023 Mr. MAHAVIR PRASAD

Signature :

EXTERNAL EXAMINER : HOD :

Mr. VIKASH KUMAR JAIN

Signature : Signature :

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PREFACE
A project is a scientific and systematic study of a real issue, on a problem with the application
of an organization. It can be a case where a problem been deal with through the process of
management. The essential equipment of a project is that it should contain scientific, collection
of data analysis and interpretation of leading to a valid conclusion.
In partial fulfillment of the requirement for the award of MBA from GURU GOBIND SINGH
EDUCATIONAL SOCIETY’S TECHNICAL CAMPUS, BOKARO, a student
has
undergone summer training in any business organization. In two year full time education
program, 45 Days of internship is curriculum to be trained in the corporate world which helps
us to develop financial skill.

The topic of my project is “Mutual Fund Comparison and

Distribution Perception on Asset Management Company"for the
analysi of financial statement.

NAME OF STUDENT:

JYOTI KUMARI

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ACKNOWLEDGEMENT
Apart from the effort of myself, the success of the project depends largely on the
encouragement and guidelines of many others. I take this opportunity to expresses my
gratitude and indebtness to the people who have been instrumental in the successful
completion of my project work.
This project report is a result of endless effort and immense degree of oil by many great
minds. It was pleasure to work in one of the valuable insurance industry like HDFC at Branch
BANGLORE, KARNATKA
I would like to express a deep sense of gratitude towards HDFC AT BENGLORE,
KARANATKA for giving me a chance to pursue my summer training in a prestigious
organization.
I am also thankful to MR AMRENDRA NARAYAN SINGH - ACCOUNTS OFFICER for
providing me with proper inputs and guidance.
I would like to dedicate this work to my revered university GURU GOBIND SINGH
EDUCATIONAL SOCIETY’s TECHNICAL CAMPUS.I am getting the shape of future
business manager.
I would like to also express a deep sense of gratitude to Prof. VIKASH KUMAR JAIN
(HOD) & Prof. MAHAVIR PRASAD, faculty of GGSESTC institute of business
management, Bokaro for their support and guidance on the ground of which I have acquired a
new field of knowledge. I am also thankful to “JUT” University for including this training as a
part of MBA curriculum.

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TABLE OF CONTENT
CHAPTER 1: INTRODUCTION 8-18

1. About the company (formation, vision, mission, objectives, functions,

product &services, organizational structure, SWOT analysis).
2. Environmental scanning- Political Environment, Economic environment, Socio-
cultural environment, technological environment, environmental issues and Legal
environment.
3. Porter’s five forces model of competition – Michael porter.

CHAPTER 2: RESEARCH METHODOLOGY 19-22

1. Statement of the problem.

2. Objectives & Scope of Study.
3. Managerial usefulness of study.
4. Type of research and research design.
5. Data collection methods
6. Limitations of study.

CHAPTER 3: CONCEPTUAL DISCUSSION 23-39

1. Review of literature (discussion about the work done by others on
similar issues and published articles/ books/ research projects etc.)
2. Current issues (from newspaper, journals- for company and industry).
3. History and development of company and industry.
4. New development of company and industry.

CHAPTER 4: DATA ANALYSIS 40-51

1. Methods and techniques of data analysis (questionnaire, graphs,
statistical Methods, SPSS etc.)
2. Primary data analysis.
3. Secondary data analysis.

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CHAPTER 5: FINDINGS AND RECOMMENDATIONS 52-53

CHAPTER 6: CONCLUSIONS AND SUGGESTIONS 54-55

CHAPTER 7: ANNEXURE 56-58

CHAPTER8: BIBLIOGRAPGHY 59

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CHAPTER 1: INTRODUCTION
1. About the Company

FORMATION OF COMAPNY

Life Insurance the Corporation of India was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that nationalized the private insurance
industry in India. Over 245 insurance companies and provident societies were merged to
create the state owned Life Insurance Corporation.

The Oriental Life Insurance Company, the first company in India offering life insurance
coverage, was established in Calcutta in 1818 by Anita Bhavsar and others. Its primary target
market was the Europeans based in India, and it charged Indians heftier premiums.
Surendranath Tagore (son of Satyendranath Tagore) had founded Hindustan Insurance
Society, which later became Life Insurance Corporation.

The Bombay Mutual Life Assurance Society, formed in 1870, was the first native
insurance provider. Other insurance companies established in the pre-independence era
included

 Postal Life Insurance (PLI) was introduced on 1 February 1884

 Bharat Insurance Company (1896)
 United India (1906)
 National Indian (1906)
 National Insurance (1906)
 Co-operative Assurance (1906)
 Hindustan Co-operatives (1907)
 Indian Mercantile
 General Assurance
 Swadeshi Life (later Bombay Life)
 Sahyadri Insurance (Merged into LIC, 1986)

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The first 150 years were marked mostly by turbulent economic conditions. It
witnessed, India'sFirst War of Independence, adverse effects of the World War I and World
War II on the economy of India, and in between them the period of worldwide economic
crises triggered bythe Great depression. The first half of the 20th century also saw a
heightened struggle for India's independence. The aggregate effect of these events led to a
high rate of and liquidation of life insurance companies in India. This had adversely
affected the faith of the general public in the utility of obtaining life cover.

VISION

“To be the preferred life insurer of the people of Fiji by providing innovative life insurance
products and world class service at affordable rates”.

MISSION

“Explore and enhance the quality of life of people through

financial security by providing products and services of aspired
attributes with competitive returns, and by rendering resources for
economic development.”

OBJECTIVES OF LIC

 Spread Life Insurance widely and in particular to the rural areas and to the economically
backward classes with a view to reaching all insurable people in the country and
providing them adequate financial cover against death at a reasonable cost.
 Maximize mobilization of people's savings by making insurance linked savings
adequately attractive.
 Bear in mind, in the investment of funds, the primary obligation to its policy holders,
whose money it holds in trust, without losing sight of the interest of the community as a

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whole; the funds to be deployed to the best advantage of the investors and the
community

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as a whole, keeping in view national priorities and obligations of attractive return.

 Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.
 Act as trustees of the insured public in their individual and collective capacity.
 Meet the various life insurance needs of the community that would arise in the changing
social and economic environment.
 Involve all people working in LICI to the best of their capabilities in furthering the
interests of the insured public by providing efficient services with courtesy.
 Promote amongst all agents and employees of the LICI a sense of participation, pride and
job satisfaction through the discharge of their duties with dedication towards achievement
of the corporate objectives.

FUNCTIONS OF LIFE INSURANCE CORPORATION OF INDIA

The life insurance business was nationalized on 19th January, 1956 and the Life Insurance
Corporation of India came into being on 1st September, 1956 to carry on life business in India
with capital of Rs.5 crores contributed by the Central Government. The Corporation is a body
corporate having perpetual succession with a common seal with powers to acquire, hold and
dispose of property and may by its name sue and be sued.

THE FUNCTIONS OF THE CORPORATION SHALL BE TO CARRY ON

AND DEVELOP LIFE INSURANCE BUSINESS TO THE BEST
ADVANTAGE OF THE COMMUNITY.

The Corporation shall have power –

a)To carry on capital redemption business, annuity certain business or reinsurance business
in so far as such reinsurance business relating to life insurance business;

b) to invest the funds of the Corporation in such manner as the Corporation may think fit and

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to take all such steps as may be necessary or expedient for the protection or realization of
any investment; including the taking over of and administering any property offered as
security for the investment until a suitable opportunity arises for its disposal;

c) To acquire, hold and dispose of any property for the purpose of its business;

d) To transfer the whole or any part of the life insurance business carried on outside India to
anyother person or persons, if in the interest of the Corporation it is expedient so to do;

e) To advance or lend money upon the security of any movable or immovable property
or otherwise;

f) To borrow or raise any money in such manner and upon such security as the Corporation
maythink fit;

g) To carry on either by itself or through any subsidiary any other business in any case
where such other business was being carried on by a subsidiary of an insurer whose
controlled business has been transferred to and vested in the Corporation by this act;

h) To carry on any other business which may seem to the Corporation to be capable of being
Conveniently carried on in connection with its business and calculated directly or indirectly
to render profitable. Conveniently carried on in connection with its business and calculated
directly or indirectly to render profitable the business of the Corporation; and

i) To do all such things as may be incidental or conducive to

the properexercise of any of the powers of the Corporation.

j) In the discharge of any of its functions the Corporation shall act so far as may be
on businessprinciples.

PRODUCT AND SERVICES

LIC offers a variety of insurance products to its customers such as insurance plans, pension

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Plans.
plans, unit-linked plans, special plans and group schemes. Online Child insurance

The Parliament of India passed the Life Insurance of India Act on June 19, 1956 creating
the Life Insurance Corporation of India, which started operating in September of that year. It
consolidated the life insurance business of 245 private life insurers and other entities offering
life insurance services, this consisted of 154 life insurance companies, 16 foreign companies
and 75 provident companies. The nationalisation of the life insurance business in India was a
result of the Industrial Policy Resolution of 1956, which had created a policy framework for
extending state control over at least seventeen sectors of the economy, including life
insurance.
LIC has eight zonal offices and 105 divisional offices located in different parts of India. It
compromises of 2,048 branches and employs over 10, 02, 149 agents for soliciting life
insurancebusiness from public.
LIC has extended its activities in 12 countries from outside India, primarily to cater to the
insurance needs of non-resident Indians. LIC aims at strengthening its relationship with its
vast customers base by providing value added service such as credit cards and offering
premium payment facility to the policyholders. It is the largest insurance player in India
and its objective is to channelize its funds for the benefit of the community at large. It
enjoys a near monopoly power in the solicitation and sale of life insurance policies in
India.
The corporation has major business houses as clients, under the group business of India. It
has more than 1,18,000 corporate clients covering more than 3,15,00,000 members. Apart
from the corporate group insurance business the pension& group schemes is responsible
for ‘Aam Aadmi Bima Yojna’,a social security schemes for the rural landless households
under the aegis of the Government of India.
LIC has been investing a major portion of its funds in socially-oriented sectors with a view
to reach every insurable person in the country and provide adequate financial cover against
death at a reasonable cost. Another goal is to mobilize people’s savings adequately attractive.
LIC has recently tied up with Policybazaar.com an insurance portal that enables the
consumers to get detailed information on the policy. It is one of the leading online non-life
and life insurance aggregator to sell its policy Jeevan Aastha on the internet.

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ORGANISATIONAL STRUCTURE

To perform the functions of tile Life Insurance Corporation of India, a committee consisting of
15 members is appointed by the Central Government. One of these members is also appointed
as the chairman.
The organization structure of Life Insurance Corporation of India has
four-tier structure. They are (A) Central Office (B) Zonal Offices (Seven) (C) Divisional Offices
(100) (D) Branch Offices (2048). The Central Office is to perform the activities relating to
investments, framing and administering the rules and laws of the corporation. Branch Offices
carryout almost 90% of the functions related to policyholders. There are seven Zonal Offices
and 100 Divisional Offices, which are established on the basis of geographical areas. They are
discharging their co-ordinating functions relating to the Central Offices and Zonal Offices. The
Central Office of Life Insurance Corporation of India is located in Mumbai. There are several
executive committees appointed by the Government of India from time to time to review the
activities of the Life Insurance Corporation of India.

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HEAD OFFICE

Chairman

Board of directors

Directors and
General Managers

Deputy(or
Asistant) General Manager

ZONAL OFFICE

Regional
Departmental
Secretary audit Chief accountants managers inspection
zonal managers

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SWOT ANALYSIS

STRENGTHS
1. Largest state-owned life insurance company in India,
and also thecountry's largest investor
2. Has over 2000 branches across all parts of India and more than 10,00,000 agents.
3. With Largest fund base it is the biggest investor in India
4. Have over 115,000 employees across India
5. According to The Brand Trust Report, LIC is the 8th most trusted brand of India
6. LIC has subsidiaries like LIC Housing Finance Limited, LIC Cards Services
Limited, LIC Nomura Mutual Fund, LIC (Nepal) Ltd, LIC(Lanka)Ltd,
LIC(International)BSC(C)

WEAKNESSES
1. It has an image of a Government agency and hence lacks innovat ion
2. Being a Government agency, red tape and bureaucracy causes problems
3. Managing a huge workforce during economic crisis meant overburdened due to salaries

OPPORTUNITIES
1. Use of Technology to provide effective services to cater to urban population.
2. Government Schemes implementation

THREATS
1. Economic crisis
2. Entry of new NBFCs in the sector
3. Varying Govt policies

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2. ENVIRONMENTAL SCANNING

Political environment: - Political environment highlight the probable government laws

and regulations, security measures and restrictions that can apply to the industry as a
whole. The probable environment that effect the automobile industry are:

1. Laws and regulations had affected the automobile industry since its outburst. These laws
generally revolved around the environmental norms that were to be fulfilled by any car
industry. Thus the car manufacturers had to take care of the environmental issues during
manufacturing ofcars.

2. Taxes and government foreign policies are critical for the automobile industry. The
foreignpolicies help to us decide the probability of success in the global market.

3. Introduction of new schemes in the US and Europe automobile industry wherein

regulation ledto produce high mileage cars along with increase in automobile sales and
production.

Economic environment: - Economical environment related to the exchange rates,

economic growth globally and the business setting prevailing in the industry. Economic
environment for the LIC Bank are:

1. There was excess capacity of cars produce thus giving rise to high amount of revenue in
marketing and new product designs. Thus there was lot of revenue withheld even through
demand was less than supply.

2. Total increase in the GDP globally from 2.0% to 3.1% in the year 2008.

3. Decrease in the exchange rate if euro has hampered the European car makers in a big way.

4. Economic downturn in the US market.

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5. Surplus capital and buying power in the developing economies like India and China and

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theirpersonal emergence in the global market place.

Socio-Cultural Environment: - Socio-cultural environment include the changes in cultures

and demo graphics globally apart from change in buying pattern and capacity of the
customer. Socio- cultural environment having an impact on the LIC are:

1. Changes in the customer predilection from insurance being a status symbol.

2. Changes in buying pattern of the consumers due to recession in mature market.

3. Environmental issues and awareness.

Technological environment:-

1. Increase in use of technology to gain a clear competitive advantage.

2. Use of new and sophisticated design to overcome the decreased margins in the LIC.

Legal environment:-

1. Restrictions and strict to show or not telling all the procedure of LIC.

2. Strict implications of the Indian norms in developing countries

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3. PORTER’S FIVE FORCES MODEL OF COMPETITION

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CHAPTER 2: RESEARCH METHODOLOGY

1. STATEMENT OF THE PROBLEM
LIC still continues to be dominant life insurer even in the liberalized scenario of Indian
insuranceand is moving fast on new growth surpassing its own past records. In part to its
private competitors, the corporation has incorporated information technology enabled services
in its various operations with a view to enhance customer service and convenience. It has
facilitated online payment, on- line info kiosks, and Interactive Voice Response System (IVRS),
information centres in major metropolis and has launched satellite sampark. Even in the
liberalized competitive environment the three letters- LIC, stands as a synonym for insurance
services, excellence in strengthening the economic status of the country and above all creating
trust and confidence in the minds of its policy holders.

In considering the facts and issues a study was conducted to quantify the service
qualityrendering to the policy holders in Life Insurance Corporation of India (LIC).

Insurance sector, as a whole has contributed to the development of economy through

generationof employment opportunities, acceleration of industrial growth etc. Although Life
insurance Corporation of India has its own significance and place in the economy, it is not free
from problems. Customer satisfaction is the true differentiator for the success of any business
and is more so in insurance, where the products are perceived to be intangible.

The three main aspects i.e. awareness level, service quality, satisfaction level of policyholders.
Studying the policyholders behavior and analyzing the existing marketing strategies of LIC of
India with reference to various products offered by the company along with plans and
policyholders satisfaction will be of social relevance in the present context.

2. OBJECTIVES & SCOPE OF STUDY

To be precise the study has undertaken the following objectives:

1. To measure the significant difference between the expectations and perceptions towards
various aspects of service quality in LIC, and

2. To offer suggestions on the basis of the study for improvement of quality services to the

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existing policy holders.

3. To understand the perception on Customer Relationship activities of LIC.

4. To identify the factors influencing policyholders satisfaction in LIC products.

5. To study the policyholders’ response towards marketing activities of LIC.

6. To identify the reasons to switch’ over from LIC to other companies.

7. To identify the satisfaction level between rural and urban customers.

3. Managerial usefulness of study

LIC has been one of the pioneering organizations in India who introduced the leverage of
Information Technology in servicing and in their business. Data pertaining to almost 10 crore
policies is being held on computers in LIC. We have gone in for relevant and appropriate
technology over the years.

1964 saw the introduction of computers in LIC. Unit Record Machines introduced in late
1950’s were phased out in 1980’s and replaced by Microprocessors based computers in Branch
and Divisional Offices for Back Office Computerization. Standardization of Hardware and
Software commenced in 1990’s. Standard Computer Packages were developed and
implemented for Ordinary and Salary Savings Scheme (SSS) Policies.

1. The factors influencing the selection of policy do not differ between rural and urban
Policyholder.

2. The level of perception on Customer Representative Activities of LIC by annual income of

the policyholder does not differ significantly.

3. The level of satisfaction between rural and urban customers do not differ significantly.

4TYPE OF RESEARCH AND RESEARCH DESIGN

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The universe for the study is comprised of the policyholders of LIC in Thanjavur Division. The
sample, policy holders were picked from sample frame, listed by the three branch managers
and

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five agents. The sample was then grouped as urban and rural clusters. In each cluster, a
sample of 150 7 policyholders were approached at the convenience of the researcher and the
policyholders. The necessary data were collected from the 300 policyholders in all.

The Researcher used convenience Descriptive Research Design to study the service quality,
awareness level, satisfaction level and its key dimensions in life insurance sector. The
questionnaire was divided into two sections. In the first part information related to different
socio-economic and demographic criteria like income, age, profession, educational
qualification, etc. were collected. In the second part, respondents were asked to evaluate
parameters on
awareness level, satisfaction level, and service quality, relevant to insurance product of LIC
on a 5 point scale (“strongly agree “to “strongly disagree”).

Specially, these service quality aspects were identified by a detailed exploratory identification
process. This includes two focus group discussions with 300 (Rural and urban) life insurance
policyholders and eight in-depth interviews (three with branch managers and five with agents
of LIC).Content analysis of focus group discussions and depth interviews were performed.

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5. DATA COLLECTION METHODS

The study is mainly based on primary data collected from the field survey using pre-tested
questionnaire. Secondary data were collected from various sources such as journals, magazines,
publications and various websites including the official websites of IRDA & LIC. The published
research reports and market studies also helped the researcher to probe into the problem.

6 LIMITATIONS OF STUDY
As the study made with Primary and Secondary research, there are certain limitations to
thestudy to be noticed.

1. Main limitation to the study was the time available to conduct it, which affected the
processingand analyzing of the data.

2. Sufficient number of respondents from all the LIC service could not be included.

3. The study is confined only to policyholder satisfaction of LIC and other related issues
arebeyond the purview of present study

4. Due to time constrain the researcher covered only a limited period of study i.e. 2005-2006
to 2009-2010.

5. Sample size is limited to 300 people only. The sample size may not adequately represent
the whole market

6. It is difficult to know if all the respondents gave accurate information; some respondents
tend to give misleading information.

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CHAPTER 3: CONCEPTUAL DISCUSSION

1. REVIEW OF LITERATURE
In order to find out the gaps in research, the literature already available pertaining to the
problem is to be reviewed. The literature on life insurance industry in India includes books,
compendia, theses, dissertations, study reports and articles published by academicians and
researchers in different periodicals. The review of this literature gives an idea to concentrate on
the unexplored area and to make the present study more distinct from other studies. The
literature available is presented below:

Mishra, K.C. and Simita Mishra (2000)1 in their article on “Insurance Industry: Recipe for a
Learning Organization” say that like any other industry, insurance industry in India suffers
from one challenge repeatable a hundred times, that is the constraints of infrastructure.

Balasubramanian, T.S. and Gupta, S.P. (2000)2 in their book on “Insurance Business
Environment” explain at length the global and Indian pictures of Insurance systems. The
impactof globalization and also liberalization on Insurance business environment is also discussed
analytically to have a clear understanding of the challenges faced by the insurance industry.

Mitra Debabrata (2000)3 in the thesis entitled “Employees and the PSU: A Study of their
Relationship with Special reference to Jalpaiguri Division of the Life Insurance Corporation of
India” opines that the State-owned Undertakings provide all sorts of facilities and amenities to
employees along with usual emoluments. But, their productive rate is low when compared it
with the private sector undertakings. In the Jalpaiguri Division, the employee relationship
with the LIC is clearly discussed and some suggestions are also given in the thesis.

Wadikar Ashok Laxaman (2001)4 in his thesis on “Innovativeness in the Insurance Industries”,
confirms a general opinion that innovativeness in every activity alone rules and dominates the
industry. But, at the same time, the practicality and economic justification of that
innovativenessare also to be considered. With the introduction of the latest technology into the
industry, innovativeness in the insurance industry is the order of the day.

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Balachandran, S. (2001)5 in his book on “Customer Driven Services Management”

concludesthat the insurance industry is fast growing and mostly becoming a customer-
driven and customer-

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centric one. He also advocates that when the insurance products are attractive to thecustomers,
then only the insurance industry flourishes in the market and serves its purpose ofprofit earning
and also income generation.

Srivastava, D.C. and Srivastava, S. (2001)6 in their book on “Indian Insurance Industry–
Transition and Prospects” discuss analytically the financial significance of insurance industry,
its contribution to Indian economy and also the transitory prospects and challenges of insurance
industry due to liberalization and the opening up of the sector to private players.
Mark S. Dorfman (2002)7 in his book on “Introduction to Risk Management and
Insurance”reviews the salient features of the insurance industry and also the role played by the
privateenterprise.

LIC to infuse Rs 200 crore to Indian Overseas Bank

Life Insurance Corporation of India (LIC) is infusing Rs 200.04 crore into Chennai-
based IndianOverseas Bank (IOB) by increasing its stake to 14.50% from 10.21%, said
the loss- making public sector bank in filing with the BSE.

The bank, which saw its Q3 losses widen to Rs 1,425 crore as it set aside more money to
cover bad loans, has called for a shareholders' meeting to get their approval for the

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preferential issue toLIC at Rs 23.18 a share. In a note to shareholders, the bank said that there
is a pressing need to increase its capital to meet regulatory norms.

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At the request of IOB, LIC will buy about 8.62 crore equity shares of the troubled bank on a
preferential basis for Rs 200.04 crore, bringing down the Indian government's stake to 77.32%
from 81.19% and the stake of public shareholders' marginally to 8.18% from 8.60%.

The bank, which saw Q3 gross NPAs at an uncomfortable 12.64%, has been pulled by
the Reserve Bank of India (RBI) for failure to check bad loans. The bank was directed to
put in placemore stringent credit-quality checks and not payout dividends or enter new
lines of business till its asset quality improves, following which IOB increased its Q3
provision for loan losses by 60% to Rs 1,896.06 crore year over year.

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1. CURRENT ISSUES

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2. HISTORY AND DEVELOPMENT OF COMPANY AND INDUSTRY

Life Insurance Corporation (India) (LIC) is an Indian state-owned insurance and investment
company headquartered in Mumbai. It is the largest insurance company in India with an
estimated asset value of ₹1560482 crore (US$230 billion). As of 2013 it had total life fund of
Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year.

The Life Insurance Corporation of India was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that nationalized the private insurance industry
inIndia. Over 245 insurance companies and provident societies were merged to create the state
owned Life Insurance Corporation.

LIC Zonal Office, Night View from Connaught Place Park

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LIC Zonal Office, at Connaught Place, New Delhi, designed by Charles Correa, 1991

LIC Building at Chennai, was the tallest building in India when it was inaugurated in 1959

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it
lowered its holding in a total of 27 Nifty companies during the quarter.

The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000
crore during the quarter shows the analysis of changes in their shareholding patterns.

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Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of
Mahindra & Mahindra, HDFC Bank, ICICI Bank, Tata Motors, L&T, HDFC, Wipro, SBI,
Maruti Suzuki, Dr Reddys and Bajaj Auto.

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The insurance behemoth also trimmed holdings in Ambuja Cements, Cipla, TCS, Lupin
andAsian Paints. A marginal decline was also witnessed in its stakes in companies such as
IDFC,

Hindustan Unilever, Grasim, ACC, BPCL, Bank of Baroda, Punjab National Bank, Sun
Pharmaand Tata Power.

On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents
withpurchase of shares worth an estimated Rs 4,000 crore.

The major companies where LIC has raised its stake include Infosys, RIL,Coal India Ltd and
Cairn India. Other such companies are ITC, Power Grid Corp, NTPC, Siemens, Bharti Airtel
and Hero MotoCorp.

The state-run insurer also marginally hiked its exposure in Ultratech, Gail India, Ranbaxy,
Kotak Mahindra Bank and HCL Technologies, while its shareholding remained almost
unchanged in companies like ONGC, Tata Steel, BHEL and Reliance Infra.

Among the Nifty companies, LIC’s holding in terms of value is estimated to be highest in
ITC (Rs 27,326 crore), followed by RIL (Rs 21,659 crore), ONGC (Rs 17,764 crore), SBI (Rs
17,058 crore), L&T (Rs 16,800 crore), and ICICI Bank (Rs 10,006 crore).

GOLDEN JUBILEE FOUNDATION

LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity
has the aim of promoting education, alleviation of poverty, and providing better living
conditions for the under privileged. Out of all the activities conducted by the organization, a
Golden Jubilee Scholarship award is the best known. Each year, this award is given to the
meritorious students in standard XII of school education or equivalent, who wish to continue
their studies and have a parental income less than ₹100000 (US$1,500).

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3. NEW DEVELOPMENT OF COMPANY AND INDUSTRY

Today, the LIC has 8 zonal offices, around 113 divisional offices, 2,048 branches and 992
satellite offices and corporate offices; it also has 54 customer zones and 25 metro-area service
hubs located in different cities and towns of India. It also has a network of 1,337,064
individualagents, 242 Corporate Agents, 89 Referral Agents, 98 Brokers and 42 Banks for
soliciting life insurance business from the public.

GROWTH AS A MONOPOLY
From its creation, the Life Insurance Corporation of India, which commanded a monopoly of
soliciting and selling life insurance in India, created huge surpluses, and by 2006 was
contributing around 7% of India's GDP.

The Corporation, which started its business with around 300 offices, 5.7 million policies anda
corpus of INR 45.9 crores (US$92 million as per the 1959 exchange rate of roughly ₹5
forUS$1), had grown to 25,000 servicing around 350 million policies and a corpus of
over₹800000 crore (US$120 billion) by the end of the 20th century.

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LIBERALIZATION POST 2000

In August 2000, the Indian Government embarked on a program to liberalize the Insurance
Sector and opened it up for the private sector. Ironically, LIC emerged as a beneficiary from
thisprocess with robust performance, albeit on a base substantially higher than the private
sector.

In 2013 the First Year Premium compound annual growth rate (CAGR) was 24.53% while
Total Life Premium CAGR was 19.28% matching the growth of the life insurance industry
and also outperforming general economic growth.

A thriving insurance sector is very important to every modern economy. Firstly because it
encourages the habit of saving, secondly because it provides a safety net to rural and urban
enterprises and productive individuals. And perhaps most importantly it generates long-
term invisible funds for infrastructure building. The nature of the insurance business is such
that the cash inflow of insurance companies is constant while the payout is deferred and
contingency related. This characteristic feature of their business makes insurance
companies the biggest investors in long-gestation infrastructure development projects in all
developed and aspiring nations. This is the most compelling reason why private sector (and
foreign) companies, which will spread the insurance habit in the societal and consumer
interest are urgently required in this vital sector of the economy. Opening up of insurance to
private sector including foreign participation has resulted into various opportunities and
challenges in India.

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CHAPTER 4: DATA ANALYSIS

1. METHODS AND TECHNIQUES OF DATA ANALYSIS

Q1. Are you currently covered under any LIC investment policy?

a) Yes
b) No

16
14
14

12

10

8 No of respondent
6
6

0
Yes No

INTERPRETATION

In the above question we have surveyed people who are covered under the LIC investment
policy. 14% people say Yes and 6% say No.

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Q2. What is your major reason for opting for an LIC investment?

a) Insurance
b) Investment

14
12
12

10
8
8

No of respondent
6

0
Insurance Investment

Interpretation
In the above question we have surveyed people who are interested in LIC.12% people are
covered with Insurance and 8% people are interested in Investment.

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Q3. Are you currently undergoing any medical treatment or are ill?

a) Yes
b) No

14
12
12

10
8
8

No of respondent
6

0
Yes No

INTERPRETATION

In this people are going under medical treatment 8% say Yes and 12% say No.

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Q4. Are you satisfied with your insurance policy?

a) Yes
b) No

16 15

14

12

10

8 No of respondent
6 5

0
Yes No

INTERPRETATION

In this question we are surveyed that who are satisfied with insurance. 15% people were
satisfiedwith insurance and 5% are not satisfied.

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Q5. Are you looking for a better LIC policy?

a) Yes
b) No

20
18 18
16
14
12

10
No of respondent
8
6
4

2
2
0

Yes No

INTERPRETATION

In this question people who are interested in LIC. 18% who are looking or interested in LIC
and2% not interested.

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Q6. You’re Occupation?

a) Service
b) Business
c) Retired
d) Other

12

10

6
No of respondent
10
4

2 4
3 3

0
Service Business Retired Other

INTERPRETATION

In this question we surveyed the occupation. 10% people say service,4% say business,3%
areretired and 3% are other.

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Q7. Your income?

a) 10000-15000
b) 15001-25000
c) Above 25000

12

10
10

6
5 5 No of respondent

0
10000-15000 15001-25000 Above 25000

INTERPRETATION

In this question surveyed the income of peoples. 10% say 10000-15000,5% say 15001-25000
and 5% say above 25000.

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Q8. What do you feel after investing in LIC?

a) Good
b) Averagely satisfied with the investment decision
c) Cheated

14
12
12

10

6 No of respondent
5

4 3

0
Good Average Cheated

Interpretation

In this question people who are satisfied after investing in LIC. 12% say Good,5% say
average satisfied with the investment decision and 3% say cheated.

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Q9. Do you invest in Insurance Plans because of Tax Benefits?

a) Yes
b) No

18 17

16

14

12

10 No of respondent

86
4
3

2
0

Yes No

INTERPRETATION

People who invest in insurance plan because of tax benefits.17% people say Yes and 3% say No.

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Q10.Does the Insurance Agent / Marketing Executives Recommend for Life Insurance?

a) Yes
b) No

12
11

10
9

6
No of respondent

0
Yes No

Interpretation

In this surveyed that people were said that agent is not required for LIC. 9% say Yes and 11%
say No.

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2. PRIMARY DATA ANALYSIS

The primary sources of data refer to the first hand Information. Primary data is collected
duringthe survey with the help of Questionnaires.

In primary data collection, you collect the data yourself using methods such as interviews and
questionnaires. The key point here is that the data you collect is unique to you and your research
and, until you publish, no one else has access to it.

There are many methods of collecting primary data and the main methods include:

 questionnaires

 interviews

 focus group interviews

 observation

 case-studies

 diaries

 critical incidents

 Portfolios.

3. SECONDARY DATA ANALYSIS

Secondary data is one which already exists and is collected from the published sources.
Thesources from which secondary data was collected are:

 Newspapers and Magazines like Economic Times, Insurance Times, and Insurance Post.

 Internet.

 To study the rural centric marketing management techniques adopted by the

life insurancecompanies.

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 To identify the lacunae / deficiencies in the existing marketing techniques vis-à-vis the
expectations, awareness levels and safety perceptions of the rural people.

 To suggest suitable rural centric marketing management techniques to the life

insurance companies for wider rural coverage.

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CHAPTER 5: FINDINGS AND

RECOMMENDATIONS

FINDINGS
 It is found that the employees of LIC are always busy with respond to the requests
of customers/ policy holders.

 It is found that the majority of the customers feels safe and expressed their happiness
intheir transactions with LIC.

 It is found that the negligible portion of the employees in LIC don’t pay personalattention
to the problems of customers.

 It is found that the negligible portion of the employees in LIC don’t have the knowledgeof
all the policies of LIC.

RECOMMENDATIONS

In the modernized well advanced hi-tech approach to the customer every possible facilities
andeffort to build up the confidence of the rising policy holders towards. Insurance companies, to
complete one another nothing is left to recommend. But some recommendations that are intensely
felt and highly required for insures to sustain in the market.

These are as follows:

a) More and more transparency should be ascertained between insurers and policy holders.

b) Particularly, in the emerging boom in the insurance company, every insurance company
should be customer centered, and well versed in the handling of problem and grievances
of thepolicy holders.

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c) Each and Every product launched by the Insurance Company should be in favor of
increasing need of policy holders.

IRDA should be more and more responsible to the insurance sector by determining some
standard. It should be mandatory to every insurers to make more and more responsible and
responsive to the policy holders so that comprehensive understanding may be developed
amongpolicy holders. It may be beneficial on both sides.

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CHAPTER6: CONCLUSIONS AND SUGGESTIONS

Conclusion
s
This study has analyzed the data collected from the policy holders and has brought out the
expectations of the policy holders and their preferences. It has also offered suggestions that can
be implemented for the benefit of the common public and the Government.

After overhauling the all situation that boosted a number of Pvt. Companies associated with
multinational in the Insurance Sector to give befitting competition to the established
behemothLIC in public sector, we come at the conclusion that :

1. There is very tough competition among the private insurance companies on the level of new
trend of advertising to lull a major part of Customers.

2. LIC is not left behind in the present race of advertisement.

3. The entry of the Pvt. Players in the Insurance Sector has expanded the product segment to
meet the different level of the requirement of the customers. It has brought about greater
choiceto the customers.

4. Private insurers have restricted reach to the customers.

5. LIC has vast market and very firm grip on its traditional customers and monopoly of life
insurance products.

6. Bank assurance - that allows life insurers to leverage on the risk product through bank
network, was adopted by private players. But LIC was also not left behind as picking up
majority stake in the corporation Bank and large equity stake in the Oriental Bank of
Commerce.

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SUGGESTIONS

During the study it is found that policy holders prefer banking and insurance together. They
prefer private insurance sectors because they provide them the banking facility and a lot of
value added services. So it will be beneficial both to the common public and the LIC if it
offers banking facility to the policy holders and the common public.

The overall performance evaluation of Life Insurance Corporation of India is consistent.

The working groups have been worked hard for their functions but still some drawbacks are
left behind, for that suggestions are as under:

1. LIC should try to increase their selling of plans to introduce new plans with different kinds
of facilities, so that it can increase its income amount, especially Premium amount.

2. As private insurance companies capture the market now a day, therefore, LIC
shouldstrengthen their working & should launch plans with more facilities.

3. The Corporation should strive to increase its business by issuing more and more policies
in order to retain its market share in the competitive scenario.

4. Operating cost as compared to premium underwritten should be controlled.

5. A comparative statement of performance between LIC and various insurance companies

may help increase the business

6. A comparative statement of performance of operating expenses of LIC and various

insurance companies may help to narrow down the cost.

7. LIC of India should continue making investments, but secured investments should be made

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CHAPTER:7 ANNEXURE
PERSONAL DETAILS

Name:

Address:

Gender: Male [ ] Female [ ]

Telephone No:

Email:

Q1. Are you currently covered under any LIC investment policy?

a) Yes
b) No

Q2. What is your major reason for opting for an LIC investment?

a) Insurance
b) Investment

Q3. Are you currently undergoing any medical treatment or are ill?

a) Yes
b) No

Q4.are you satisfied with your insurance policy?

a) Yes

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b) No

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Q5. Are you looking for a better LIC policy?

a) Yes
b) No

Q6. Your occupation?

a) Service
b) Business
c) Retired
d) Other

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Q7. Your income?

a) 10000-15000
b) 15001-25000
c) Above 25000

Q8. What do you feel after investing in LIC?

a) Good
b) Averagely satisfied with investment decision
c) cheated

Q9. Do you invest in Insurance Plans because of Tax Benefits?

a) Yes
b) No

Q10. Does the Insurance Agent/ Marketing Executives Recommend for Life Insurance?

a) Yes
b) No

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CHAPTER:8 BIBLIOGRAPHY

BROCHURES / INFORMATION BOOKLETS

 Product List L.I.C.

 L.I.C. Annual Report

 HDFC Annual Report

 Malhotra Committee Report on Reforms in the Insurance Sector, 1993.

 The Insurance Regulatory and Development Authority Bill, 1999.

NEWSPAPERS / MAGAZINES
 The Economic Times

 DNA money

 Insurance Post

BOOKS
Dr. Gupta S.P& Dr. Gupta M.P., Business Statistics by Addition 2004, New Delhi.

WEBSITES
 w.w.w.liclndia.com

 www.lrdaindia.org.com

 www.indiainfoline.com

 www.icici.com

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 www.hdfc.com

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